Mylan shares soared by as much as 16% in trading before the opening bell on Wednesday, after the United States Food and Drug Administration gave its approval to the company’s generic version of Copaxone a blockbuster drug by Teva that is for the treatment of multiple sclerosis.
The approval came as a surprise one day after the federal regulatory agency announced it would be introducing a number of new measures that would cut the amount of time generic versions of complex drugs have to reach the market in its effort to address rising costs in pharmaceuticals.
Teva, based in Israel, saw its U.S. listed shares drop 15% following the announcement by the FDA, while Mylan became the top gainer for the S&P 500 prior to the market opening Wednesday.
The FDA gave its approval to both of Mylan’s two doses of 20mg and 40mg for its version of Copaxone that generated sales during just the second quarter of 2017 of over $1.02 billion.
Mylan missed out receiving approval on two occasions this year, and prior to Tuesday, investors believed further delays would take place.
One analyst on Wall Street said that the FDA approval represents a big positive for this story and will significantly lower the risk and increase support to the earnings per share for Mylan for 2017 and 2018.
However, for Teva, the approval by the FDA of Mylan’s copycat version means the drug maker has generic competition between 9 and 12 months prior to the previous expectations on Wall Street.
One analyst on Wall Street said this news adds to what was already a challenging short term setup for Teva, with the businesses generic segment in the U.S. under heavy pressure, very high levels of leverage, as well as limited clarity for drivers of a wide ranging recovery in its results.
Teva in September said it wanted to partner with other pharmaceuticals to fund part of its development of drugs, as it has struggled with its debts and its expiring patents.
Mylan announced that it was expecting to begin shipping its newly approved generic drug very shortly and that the approval letter from the FDA said it might also be eligible for exclusivity for 180 days on the medication.
A spokesperson for Mylan did not comment when asked beyond the drug’s FDA approval.